Aggregators: friend or foe? Erik Sandquist highlights four responses from traditional insurers—and the characteristics that can equip an insurer to best adapt to competition from aggregators.

When it comes to the impact of aggregators on traditional insurers, some have fared better than others. For some, aggregators can create opportunities. For example, because aggregators lower the barrier to entry, they can facilitate the entry of new carriers. In addition, they can provide smaller insurers—those with less well-known brands or smaller marketing budgets—a way of competing with larger companies. In general, the carriers that have suffered the least are those with highly segmented or highly differentiated offerings and a low cost base.

Accenture has identified four ways that traditional insurers tend to respond to aggregators:

  1. Rejection. Some insurers have refused to work with aggregators—going so far as to make their absence from aggregators a selling point. These insurers tend to have large quantities of direct sales and an established brand (that they feel the need to protect), and feel able to leverage both to continue selling at a profitable volume.
  2. Cooperation. Worldwide, an increasing number of insurers have accepted aggregators as just another distribution channel, and make their products available through them. Some offer products specifically designed for aggregators and/or online channels.
  3. Crowding out. Some carriers don’t just participate in aggregators, but use them as part of a strategy to crowd out competitors. They can achieve this by offering multiple sub-brands, or by offering multiple quotes on a single brand, with the goal of dominating the aggregators’ first page of search results.
  4. Participation. Increasingly, we see insurers getting involved in the aggregator model, sometimes by setting up their own aggregator, forming a close alliance with an existing one or making strategic investments in established aggregators.

Of course, it’s up to each insurer to decide what an appropriate course of action is. However, US insurers can learn from their UK counterparts’ experience, where aggregators have captured a significant part of the personal auto industry by capitalizing on incumbents’ inability to leverage their scale and brand.

As the Accenture Technology Vision for Insurance 2016 highlights, partnering with other companies—including aggregators—can allow insurers to take part in the platform economy. In turn, they can capture new opportunities, deliver better outcomes to their customers and expand the insurance value proposition.

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